INFRA BOTTLENECKS STYMIE PHL ECONOMIC GROWTH - NEW NEDA CHIEF
LOS BAÑOS, JUNE 8, 2012 (MALAYA) Written by PAUL ICAMINA - The Philippines will have to unclog the bottleneck in infrastructure development to fast-track growth and reduce poverty, the country’s economic czar said.
“We need to move the country into a higher growth path; we can’t just stay at 4 to 5 percent GDP, the country’s growth path for the last 25 years” said Dr. Arsenio M. Balisacan, the newly-appointed Economic and Planning Secretary and Director-General of the National Economic Development Authority (NEDA).
“The long-term potential of the economy has to be raised,” he told senior and mid-level managers and technical staff of the Department of Agriculture undergoing training on econonomic analysis for policy formulation at the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA).
The 7 percent to 8 percent GDP growth target outlined in the country’s medium-term development plan will be maintained, said Balisacan, a professor of economics and dean of the University of the Philippines School of Economics. Prior to that, he was head of SEARCA, a regional research center based here.
“The target is doable, but the problem is the slow implementation and the President’s instruction is to speed it up, especially the infrastructure,” he said. “So we are looking at the entire process, see where the bottlenecks are.”
The NEDA Board, chaired by the President with NEDA as the vice-chair, approves all government projects costing more than P500 million.
“There is much interest in the private sector in building the infrastructure through the Public-Private Partnership initiative but it is not moving as fast because it’s hard to package so many projects, especially since one has to strike a balance between profitability from the point of view of the private sector and affordability and equity from the point of view of the paying public” he said.
It’s a tedious process that bureaucracy often find difficult to speed up, said Balisacan, citing for example a proposal for a light rail transit project that needs to establish how much to charge the commuter so the project is viable but not burdensome to the riding public.
“We need to declog the bottleneck in private investment,” Balisacan said. “The investment rate in neighboring countries is over 20 percent of GDP; to reach that level here, you have to raise the rate of domestic and foreign savings, including the equity brought by foreign investors and foreign loans and development assistance.”
“The investment rate is quite low compared to the savings rate, meaning that savings far outweigh investments,” he observed. “The implication is that there is little confidence on the economy.”
The country achieved a 6.4 percent growth in GDP in the first quarter of this year, significantly higher than the current 4.5 percent GDP long term potential and close enough to the 7 percent GDP achieved in an election year during President Arroyo’s term.
Balisacan pointed out that data from 1980 to 2010 in per capita GDP shows that Vietnam is fast catching up and in five years will be richer than the Philippines in per capita terms.
“Indonesia became richer than us in the late 1990s while China overtook us in 2000,” he said.
Chief News Editor: Sol Jose Vanzi
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